Wednesday, January 7, 2009

Quotes of Interest

When Men Use Reason, Not Religion

While we are indeed witnessing a battle of civilizations, this battle is between Western civilization and Islam. Western civilization is in fact a mixture of two traditions: the Greco-Roman and the Judaeo-Christian. Ever since the spread of the latter into the West, there have been periods when that element has been stronger or weaker. ... [T]he lowest point for the Western world was reached precisely when its cultural milieu was closest to being unadulterated Christianity. The Renaissance arose after classical learning was rediscovered in the West and men began using their minds again, rather than subordinating them in blind obedience to the dictates of religious authority. Gus Van Horn

Austrian vs. Neoclassical Economics

Neoclassical economists usually explain their disdain for the Austrian School by saying that, although their theories may seem to be logically and correctly constructed, they lack predictive power...[However...]

[T]he traditional Austrian theory is able to explain the main facts of the current crisis, and, being available to all professional economists, it should have enabled [the neoclassical economists] to anticipate and explain this crisis with far greater success than they have had. The sequence described by ABCT is as follows.

--Banks grant new loans on a massive scale and the interest rate drops.
--Credit expansion drives malinvestments in projects far from consumption which were not profitable before the credit expansion.
--Capital goods rise in price.
--Prices climb on the stock market.
--The capital structure is artificially lengthened.
--The capital-goods sector demands more workers.
--At some point the rate of growth in credit expansion ceases. The interest rate climbs. The stock market crashes.
--Consumer goods prices grow faster than wages, in relative terms.
--Accounting profits appear in the consumer sector (demand increases).
--The capital-goods sector sustains heavy accounting losses.
--Workers are laid off in capital-goods industries.

[Note: After each sequence, the author gives credible examples to demonstrate the predictive power of the Austrian School. Click on the attribution at the bottom of this section for the full Daily Article.]

The current situation is precisely this: we face a credit crunch stemming from the creation of bad debt by the banking system (based on hyperabundant money) and the central banks. The recession seems to be inevitable: malinvested assets will undergo a severe adjustment due to the sale or the repossession of assets on a massive scale, which is necessary to repay the debt.

Neoclassical economists, and specifically monetarists, have brought us here. Keynesian theory fell apart in the 1970s, and now monetarism has followed. The Austrian School is the only remaining source of credible analysis and sound economic policy.

If financial and business communities do not want to sacrifice themselves in an ever-intensifying cycle of monetary chaos, they should start to listen to the Austrians; as should the media as well. For some people, unfortunately, intellectual conceit and convenient ignorance are more powerful forces than honesty and prosperity. Daily Article by Ludwig von Mises Institute

Health Care "Architects" Should Empty Bedpans

When President-Elect Obama nominated Tom Daschle to be his Secretary of Health and Human Services, he proclaimed the former Senate Majority Leader: "one of America's foremost health care experts."

I read his book "Critical: What We Can Do about the Health-Care Crisis."
Senator Daschle wrote his book with 2 other experts, Scott S. Greenberger and Jeanne M. Lambrew. According to the flyleaf, Greenberger is a reporter and consultant. Lambrew is a senior fellow.

To paraphrase a famous quote by Sam Rayburn, "They may be just as intelligent as you say. But I'd feel a helluva lot better if just one of them had ever emptied a bedpan."

In the introduction, the Senator recounts for us the many attempts by the federal government, beginning with Harry Truman, to guarantee health care to all Americans. Since none of these attempts have succeeded, Daschle diagnoses American health care as "broken." He pins blame on 3 areas:
[The first is] The complexity of the health-care issue.

Health care shouldn't be complex. Basically, it's a service. A cardiac surgeon once remarked to me, "Take a look at any hospital parking lot early on a Sunday morning and note how few cars there are. That's all you need to run a hospital. Everything else is just fluff." It's the fluff that's making American health care complex. One never hears about the "complexity in automotive repair", or the "complexity of the hair salon issue." Yet health care is deemed to be so complex that the entire system needs to be scrapped. Who's making it complex? Who's piling on the fluff? Certainly not doctors and nurses. If you answered "The Federal government," you are obviously not a Senator or a senior fellow. American Thinker; Article By Carol Peracchio

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